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The Whistleblowers Prosecuted For Exposing A Multinational

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In the mid-2010s, two European whistleblowers, referred to here as Person A and Person B, passed on information that they had acquired in their role within a multinational company to a journalist. The documents opened the door for scrutiny over the tax rulings in the nation in which they worked, as well as over the nature of tax advice given to clients by Company A. 

In this anonymised case study, you will find out what the leaks proved, what happened to the reporting persons and how the events led to a major regulatory change across the European Union.  

Background

In the early 2010s, French television ran a report about tax rulings in another EU country that were beneficial to multinational businesses. In essence, it allowed the businesses to reduce dramatically the amount of tax they paid by reallocating profits made elsewhere to that country or by setting up loans between subsidiaries. As a result, the EU nation had attracted many big businesses, and major accounting companies were helping them to take advantage of these rulings.   

Many of these businesses were only symbolically based in that territory. Instead, they were purely registered there to take advantage of the favourable tax regime.  

At the time, it only caused a minor stir, but two years later, the story reached the newspapers around the world as a result of a collective effort under the umbrella of the International Consortium of Investigative Journalists (ICIJ). 

The ICIJ reported that the investigation involved testimony from employees of multiple accounting companies. However, the multinational, whose employees Person A and Person B had made contact with the journalist, was the only company to make an official complaint to the authorities.  

What happened next?

Within months of the publication of documents, the prosecutor’s office in the European country announced it had charged Person A with theft and disclosure of confidential information and trade secrets, amongst other crimes. The charge followed a complaint by his employer, with Person A claiming the information he had shared was in the public interest and that he had not hacked into systems or shared protected documents.  

In the following months, Person B was charged with the same crimes, including sharing the tax returns of companies in the US that had taken advantage of the beneficial tax environment. 

In addition, the journalist who reported the initial leaks, was indicted for his part in the revelation of the papers. 

At trial, the whistleblowers were found guilty and received suspended prison sentences and fines. The journalist received a fine. There followed an appeal at which the sentences were reduced and the journalist acquitted. A further appeal to a higher court saw Person A granted whistleblower status with his conviction quashed, but not Person B. It took two further appeals to the European Court of Human Rights for it to be decided that Person B’s conviction contravened his human rights. He was eventually cleared in 2023, nine years after the initial revelations.  

Consequences of the case

The case provided two major results in its wake. Following the public reaction to the activities of the accounting firms and their clients, the EU introduced new legislation to regulate the activities of tax intermediaries.  

The case was also cited in the creation of the EU Whistleblowing Directive as an example of why whistleblowers required formalised protection after making their reports. The directive specifically protects anyone who “had reasonable grounds to believe that the information on breaches reported was true at the time of reporting and that such information fell within the scope of this Directive”.  

It also states: 

“It should not be possible to rely on individuals' legal or contractual obligations, such as loyalty clauses in contracts or confidentiality or non-disclosure agreements, so as to preclude reporting, to deny protection or to penalise reporting persons for having reported information.” 

The whistleblowers’ employer received negative press following the matter. Much of the focus related to the complaints made against Person A and Person B, which could be viewed as retaliation. prosecuted-for-exposing-a-multinational

The solution 

Training stakeholders, from senior management down, on the importance of preventing retaliation against whistleblowers should play a key role in your whistleblowing policy 

 And to help improve the effectiveness of your whistleblowing processes further, you can use IntegrityLog. It allows for confidential online reporting and safe data storage, as well as using a clear dashboard that helps you meet deadlines and remain compliant. Request a demo or request a 14-day free trial to find out how IntegrityLog can save you time and effort today.  

References and further reading

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